Investment Structuring in Dubai: Holding Companies, SPVs and Share Classes

By Bill Anderson, FCCA, Chief Executive Officer, Assetica · Published 2026-10-30

Direct Answer: Investment structuring in Dubai means deciding where an investor's money lands, what it buys and which rules govern its rights. The usual choice is between a mainland LLC, a free zone company, or a DIFC or ADGM holding company or SPV. Federal Decree-Law No. 20 of 2025 lets mainland LLCs issue more than one class of share, with detailed rules to follow. Structure does not change what the business earns. It changes how value is shared between founders and investors.

Founders often treat structure as a box to tick. Investors do not. A term sheet is a list of rights. Each right has to live in the articles or a shareholders' agreement, under a law that a court will enforce. Where you put the company decides which rights are available and how reliably they can be enforced.

This guide is for founders raising capital and the investors backing them. It covers the main vehicles, the 2025 mainland changes, investor protections, corporate tax and the value of each share.

Structuring for a raise is not structuring for a sale

Two of our existing guides deal with structure from the owner's side. Our note on holding company structures and valuation explains why a clean group is easier to sell. The private company restructuring guide covers tidying up entities and balances before a transaction.

Investment structuring asks a different question. It is about designing the vehicle a new investor will own a piece of, and deciding what that piece carries. The questions are forward-looking. Who will invest next? What class of share will they want? How will everyone get out, and in what order will they be paid?

Get those answers right at the first institutional round and later rounds tend to slot in. Get them wrong and each new investor reopens the foundations.

The four places an investment can land

A Dubai business raising capital will usually hold its operating company under one of four types of vehicle.

Vehicle	Legal framework	Where it tends to fit	What to check first
Mainland LLC	Federal Commercial Companies Law, as amended in 2025, and the onshore courts	Businesses trading directly in the UAE market, with investors comfortable onshore	Whether the Cabinet decision setting out the share class rules has been issued
Free zone company or HoldCo	The zone's own company regulations	Groups already operating in a zone, or wanting a low-cost holding layer	What the zone's rules allow on share classes and transfers
DIFC company or Prescribed Company	DIFC common law framework and DIFC Courts	Venture and institutional rounds, co-investment SPVs, holding structures	Prescribed Companies are passive, so trading stays in a subsidiary
ADGM company or SPV	ADGM common law framework and ADGM Courts	Similar uses to DIFC, often where investors or regulators sit in Abu Dhabi	Eligibility conditions for the SPV regime you intend to use

The DIFC states that its Prescribed Company regime is now open to any applicant, following 2026 amendments. These vehicles are passive: they hold assets and shares, but cannot trade or employ staff. DMCC also offers SPVs and holding companies under its own company regulations, and ADGM runs its own set-up routes.

A common pattern is a financial centre holding company owning a mainland or free zone operating company. The investor holds shares in the top company, where the rights are written, and the trading licence stays where the customers are. Our note on DIFC, ADGM and mainland jurisdiction covers how buyers price that choice.

What Federal Decree-Law No. 20 of 2025 changed for mainland companies

Until recently, a founder who wanted to issue preference shares usually had to move the cap table into a financial centre holding company. The amendments to the Commercial Companies Law, Federal Decree-Law No. 32 of 2021, narrowed that gap. They were issued as Federal Decree-Law No. 20 of 2025 and entered into force on 15 October 2025.

For investment structuring, four changes stand out.

Multiple share classes in LLCs. A mainland LLC may now issue classes with different economic and voting rights. That can include dividend priority, liquidation preference and redemption. The detailed rules are reserved for a future Cabinet decision.
Drag-along and tag-along rights. LLCs and private joint stock companies can include these in their constitutional documents. In an LLC their exercise remains subject to the statutory pre-emption regime, so the shareholders' agreement should include a pre-emption waiver.
Re-domiciliation. Companies can move their domicile within the UAE, including between emirates and between onshore and free zones, subject to implementing rules.
In-kind contributions. Valuing non-cash contributions to capital, including the approval of valuers, will follow standards to be issued by the federal ministry in coordination with local authorities.

Once the implementing rules are issued, a mainland LLC could be a realistic home for a priced round in more cases than before. That would not make the financial centres redundant. Many institutional investors still prefer common law documents and courts. Until the rules arrive, share classes in an LLC remain a principle rather than a tested tool. The right answer turns on who your investors are.

Investor protections and what each one does to value

Investor protections are not boilerplate. Each one moves value between shareholders, or changes how easily a stake can be sold. Two shares with the same nominal value can be worth very different amounts.

Protection	What it does	Effect on value
Pre-emption	Existing holders get first refusal on new or transferred shares	Protects against dilution, but narrows the pool of outside buyers for a stake
Drag-along	An agreed majority can require minorities to sell on the same terms	Makes a whole-company sale deliverable, which supports value at exit
Tag-along	Minorities can join a sale by the majority on the same terms	Reduces the case for a deep minority discount on a change of control
Liquidation preference	A class is paid back first on a sale or winding up	Shifts value to the preferred class, most of all at lower exit values
Anti-dilution	Adjusts an investor's terms if a later round is priced lower	Transfers the cost of a down round to founders and ordinary holders
Reserved matters	Named decisions need investor consent	Gives a minority a degree of control, which affects any lack of control discount

A drag-along clause is only as good as its enforceability. If the articles and the shareholders' agreement disagree, or pre-emption has not been waived, a buyer may not get the clean 100 per cent it is paying for.

How structure changes the value of each share

The headline figure from a funding round is a post-money valuation. It is calculated by taking the price paid per preferred share and multiplying it across every share in issue. It is not the value of an ordinary share.

Consider a hypothetical company that raises AED 10 million for 20 per cent, with a one times non-participating liquidation preference. The headline post-money figure is AED 50 million. Take an exit at AED 30 million. The investor chooses the better of its AED 10 million preference or its 20 per cent share of AED 6 million, so it takes AED 10 million. Ordinary holders share AED 20 million, not the AED 24 million a simple pro rata split would suggest.

Now take an exit at AED 100 million. The investor converts and takes AED 20 million, and the preference has no effect. The same right is worth a lot at a low exit and nothing at a high one. That is why a proper valuation of each class models a range of outcomes rather than dividing one number by the share count.

An employee share scheme priced at the round price overstates what staff are receiving, a point covered in our guide to employee share scheme valuation. A founder transferring ordinary shares to a holding company at the headline price may also be using the wrong figure. Where the purpose calls for it, a share valuation by class gives each holder a number they can defend.

Holding layers add a second effect. An SPV holding only shares is valued by looking through to the business beneath it, then adjusting for costs, debt and rights at the SPV level.

Corporate tax: the high-level map

Structure decisions in the UAE now have to be read alongside corporate tax under Federal Decree-Law No. 47 of 2022. The headline rate is 9 per cent on taxable income above AED 375,000. The detail sits on the Federal Tax Authority corporate tax pages. Four points matter most for investment structures.

Qualifying Free Zone Persons. A free zone company that meets the conditions pays 0 per cent on qualifying income and 9 per cent on other taxable income. Earning too much non-qualifying revenue can cost the company its status altogether, so test the conditions before choosing the zone.
Participation exemption. Dividends and gains from qualifying shareholdings can be exempt. The conditions include an ownership interest of at least 5 per cent, or an acquisition cost of at least AED 4 million. The interest must be held for at least 12 months, and a subject to tax test applies.
Tax groups. A UAE-resident parent and subsidiaries it owns at least 95 per cent can elect to be treated as one taxable person. That means one return, one AED 375,000 band and joint liability. A Qualifying Free Zone Person cannot be a member.
Qualifying group relief. Assets can move between companies with at least 75 per cent common ownership without an immediate taxable gain, if the conditions are met.

These thresholds interact with investor stakes. An investor taking 10 per cent of a subsidiary takes it below the tax group threshold. Settle these points with your tax adviser before the term sheet is signed. Our page on corporate tax valuation covers the valuation side.

Questions to settle before the term sheet

Who are the likely investors over the next two rounds? Regional family offices, international funds and strategic investors often have different preferences on law and courts.
What instrument will they use? Ordinary shares, preference shares, convertible notes or SAFEs each need a vehicle that can issue and enforce them.
Where do the licences and contracts sit? Moving a trading licence or key contracts is harder than adding a holding layer above them.
What is the most likely exit? A trade sale, a secondary or a listing each puts weight on different rights.
What does the tax map look like after the round? Check ownership thresholds and free zone status with the investor's stake included.

Mistakes that cost value later

The first is adding a holding company after the round has closed. Investors then have to swap their shares, which needs fresh consents, documents and often a valuation. Doing it once, before money comes in, is cheaper.

The second is a shareholders' agreement that does not match the articles. A buyer will want to see the same rights in both documents. Rights that exist only in a side document are the ones most likely to be argued over at exit.

The third is pricing non-cash contributions loosely. Intellectual property or a business contributed into a new holding company needs a supportable value. That value feeds the cap table, corporate tax and, under the 2025 amendments, a federal valuation framework for in-kind contributions.

The fourth is treating the headline round price as the value of every share. As the example above shows, it rarely is.

Designing the structure for your next round?

We model how each option changes the value of every class of share, so founders and investors can see the trade-offs before the lawyers draft. Every engagement starts with a scoping call and a fixed fee quoted in writing.

Explore our business structuring work

Frequently Asked Questions

What is investment structuring in Dubai?

It is the design of the vehicle an investor buys into. That covers the jurisdiction of the holding company, the classes of share, the rights in the articles and shareholders' agreement, and the tax position of each layer. The aim is a structure that suits this round, the next one and the eventual exit.

Can a mainland LLC in Dubai issue preference shares?

Federal Decree-Law No. 20 of 2025 allows mainland LLCs to issue multiple classes of share with different economic and voting rights. That can include dividend priority, liquidation preference and redemption. The detailed rules are reserved for a future Cabinet decision, so confirm with your lawyers what is available when you raise.

Should a startup use a DIFC or ADGM holding company?

Often, but not always. A financial centre holding company gives investors a common law framework and dedicated courts, which many institutional funds prefer. A business with mainly regional investors and a simple cap table may be able to stay onshore, more so once the share class rules are issued. The investor base, the instruments and the exit route should decide it.

Do drag-along and tag-along rights affect valuation?

Yes. An enforceable drag-along makes a full sale deliverable, which supports value at exit. A tag-along lets minorities share in a control premium, which narrows the discount a minority stake might otherwise carry. Both depend on the articles, the shareholders' agreement and any pre-emption waiver being consistent.

How does UAE corporate tax affect a holding structure?

At a high level, it depends on free zone status, the participation exemption for dividends and gains, and whether companies can form a tax group or use qualifying group relief. Each test has ownership thresholds. An incoming investor's stake can change whether a company meets them, so model the tax position after the round.

Is the post-money valuation the value of my ordinary shares?

Usually not. The post-money figure applies the price paid for preferred shares to every share in issue. Ordinary shares carry no preference, so they are typically worth less per share. A valuation by class models different exit outcomes and allocates value according to each class's rights.

This article is general information, not legal, tax or investment advice.

Disclaimer. This article is general information about valuation practice in the UAE and is not a valuation, an opinion of value, or tax, legal or investment advice. Any figures or reference ranges are indicative and are not a quotation for any specific business. Rules, rates and the requirements of individual authorities change, so confirm the current position before relying on anything here. For your own circumstances, book a scoping call.

Speak to Assetica about Business Valuation

Assetica is an independent business valuation firm in Dubai. We do not audit and we do not broker deals, so the number carries no conflict. Read more about business valuation, or book a scoping call. Standard reports are issued in five to seven business days.